CEO Confidence Continues To Improve

The Conference Board Measure of CEO Confidence, which rebounded in the fourth quarter of 2010, improved more in the first quarter of 2011.

The figure now stands at 67, up from 62 last quarter (a reading of more than 50 points reflects more positive than negative responses).

“CEOs’ confidence has improved, yet again, and expectations are that the economy will continue to expand in the coming months,” said Lynn Franco, Director of The Conference Board Consumer Research Center.

“As for the employment outlook, CEOs are more bullish than last year, with half now saying they intend to ramp up hiring.”

CEO’s view of current economic conditions was much more upbeat, with 85 percent saying conditions are better compared to six months ago, up from 56 percent last quarter. In assessing their own industries, business leaders were also more positive. Now, nearly 61 percent say conditions have improved, compared with 55 percent in the fourth quarter of 2010.

CEOs’ optimism about the short-term outlook continues to grow. Currently, 66 percent expect an improvement in economic conditions over the next six months, up from 56 percent last quarter. Expectations for their own industries, however, are slightly less optimistic, with 49 percent of CEOs expecting conditions to improve in the months ahead, down from 51 percent last quarter.

Half of all CEOs anticipate an increase in employment levels in their industry, up significantly from 30 percent a year ago. The proportion of CEOs who anticipate a decrease in hiring declined to 16 percent from 22 percent a year ago.

On a separate question, CEOs say regulation and litigation are major obstacles to hiring new workers, followed by health care costs and wage and salary costs. Other fringe benefits are of lesser concern when hiring new workers.

The Canadian Federation of Independent Business has announced an update to its Business Barometer Index, and – in a good way – the change is insignificant. Only a slight dip registered despite elections and the crises in the Middle East and Japan.

The Index just slipped from 69.4 in February to 69.2 in March, which is of course about the smallest possible decrease. And as always, any level above 50 is supposed to signify that the majority of small business owners believe their firms will do better next year.

So that’s the positive news. Unfortunately, there’s reason to be a little bit apprehensive about what the figures for April will show.

CFIB vice president and chief economist Ted Mallett said in a statement, “It should be noted however, that the majority of responses to the monthly survey were logged early in the month-before the earthquake and tsunami in Japan roiled international markets and before the election call in this country.”

Then Mallet continued, “Elections don’t normally have much impact on business optimism, and the initial market reactions to conditions in Japan have since seen at least a partial correction. But there is no doubt businesses are currently dealing with more uncertainty and interruptions to trade.”

We can probably be confident that the index will stay well above 50, in any event.